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Today’s China Readings August 15, 2012

"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner

Thanks for reading. The best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is still blocked here. You can also follow me on @niubi or Sina Weibo @billbishop.

Yesterday’s Sinocism wrote that “local governments, starved of revenue from land sales, desperately need new sources of income, and a property tax could improve their fiscal fortunes. But the center-local relationship is very complex in China, and this week’s Caixin has a good article examining the real estate repression regime since 2010–谁在坚持地产调控: 2011年，是温总理PK开发商；现在，是温总理PK地方政府.”

China’s financial system is seeing increasing risks as a slowing economy leads to an increase in bad loans, the Financial News said in a front page editorial Tuesday. “Risks within the financial system can be easily exposed as the external environment changes and domestic economy slows,” said the newspaper, which is published by the People’s Bank of China.

Investors and companies are increasingly pulling money out of China and its currency in a vote of concern over its growth prospects, a development that could hinder Beijing’s efforts to spark a turnaround.

As Western social-media and Internet companies from Facebook Inc. FB -5.65% to Groupon Inc. GRPN -27.02% struggle to meet investor expectations on earnings and share price, their biggest peer in China still going strong.

“We are seeing lots of strain on local government finances,” said Ni Pengfei, a researcher at the Chinese Academy of Social Sciences. “It is hard to quantify, but there is certainly lots of pressure.”
The disappointing land sales could explain a spate of local government measures that are aimed at rolling back central government policies. More than 50 cities have tried to tinker with government restrictions on property sales, offering special tax breaks, instructing banks to reduce interest rates on loans, and encouraging investors from outside the city, according to an estimate by the Chinese Academy of Social Sciences. Beijing has overturned a number of the moves, but more than 40 such adjustments have been allowed to stand.

The recall would cover almost all the cars, utilities and SUVs sold in Australia by the Chinese brands Great Wall and Chery. Chinese manufacturers have ceased production of the vehicles – which were found to use asbestos gaskets – and are examining the use of alternative components.

On Jingcheng Highway just outside Beijing on Sunday, a bus with Chengde, Hebei province license plates lost control after driving over water near the exit of Qilinlou Tunnel. It appeared to hydroplane before tipping over and skidding to a stop after several meters. We’re told of the 19 passengers onboard, there was one fatality, an elderly man. The other 18 were sent to nearby hospitals.

journalists learned from Hefei University that at 12:30pm on August 10th, the university captured the indecent photos on the internet and started investigation immediately, and confirmed Wang Yu was among the involved parties. Wang Yu himself confessed that the other two men in the photos were not government leaders in Lujiang County and they did not know each other. The university immediately called a Party Committee meeting and decided to remove Wang’s office. The university also reported the decision to Hefei Municipal Party Committee and Discipline Check Committee, who started investigation and reached a conclusion at 11pm on the same day that the photos were taken in May 2007 when Wang Yu participated in licentious activities. The university held a Party Committee conference at 11:30pm on August 10th and decided to remove Wang’s party membership and official position. One of the females in the photos was Wang Yu’s wife, a middle school teacher in Hefei, and she was also expulsed from the Party and fired from her job.

Believe or not, starting at 9am today (15th August, 2012), several major B2C sites will cut down the price of all home appliance, and everyone promises they will offer the cheapest price. In the bloody price ware, one side is 360buy, and the other is the union of Suning, Gome, DangDang and 51buy.

A prominent loan guarantee firm in Beijing will go bankrupt if no restructuring plan can be agreed upon by August 20.
Zhongdan Investment Credit Guarantee Co. Ltd., established in 2003, has been caught in a liquidity crisis since January, when its capital chains reportedly started falling apart. This prompted banks and clients allegedly tricked into depositing their borrowed money with the firm to demand immediate repayment.

Most suppliers of NVC Lighting Holding Ltd. have stopped delivering goods because its board of directors did not reply to a request regarding management structure.
The suppliers had wanted Wu Changjiang to return as chairman and Schneider Electric to leave the management team.
The battle between the founder of the firm and its investors has been closely watched in China. Some investors have claimed weak corporate governance and hinted at financial irregularities under Wu, who had resigned. Workers who want Wu to return went on strike for one day.

China’s plan to rapidly expand large coal mines and power plants in its arid northern and western provinces threatens to drain precious water supply and could trigger a severe water crisis, a report by environmental activists Greenpeace said on Tuesday.

The nation’s total electricity consumption grew only 4.5 percent from a year earlier to 455.6 billion kWh, the NEA said in a statement on its website.
The July data brought electricity consumption in the first seven months to 2.83 trillion kWh, up 5.4 percent year-on-year, easing further from the 5.5 percent seen in the first half of this year, according to the NEA data.
In breakdown, power consumed by the agriculture sector dipped 0.4 percent year-on-year to 58.9 billion kWh, while electricity consumed by the industrial and manufacturing sector added 3.6 percent year-on-year to 2.1 trillion kWh.But the service industry and residential power consumption expanded much faster than that of the agriculture and industrial sectors during the period, showed the NEA data.

A senior official of the Communist Party of China pledged on Tuesday to carry out greater intra-Party democracy, a task experts said is crucial.
The pledge came as the 91-year-old Party elected 2,270 delegates to attend a national congress later this year.
The elections, held from October to July, have seen an unprecedented choice, with every 100 delegates elected from a field of more than 115 candidates.
This represents a bigger choice than the 2002 and 2007 congresses.

Construction workers on Tuesday laid the last piece of a railway that will link southwest China’s Yunnan province with the Association of Southeast Asian Nations (ASEAN) countries.
The Yuxi-Mengzi Railway has a total length of 141 km with a designed maximum speed of 120 km per hour. It passes through 35 tunnels and crosses 61 bridges, which together account for 54.95 percent of the line’s total length.
The railway is part of the eastern line of the planned Pan-Asia Railway network, an international railway project that will also consist of central and western lines.

Zhou, 42, was gunned down early on Tuesday morning by two plainclothes officers who besieged him at an alley in Tongjiaqiao village, Shapingba district of Chongqing, where he was believed to be hiding. Zhou first fired at police.

About 30.5 percent of the delegates elected to attend the upcoming 18th CPC National Congress are from the grassroots level, up 2.1 percent from the previous congress in 2007, said Wang Jingqing, deputy head of the Organization Department of the CPC Central Committee, at a press conference here.

BEIJING, Aug. 14 (Xinhua) — The ratio of income earned by urbanites to that of rural residents is about 5.2, said a blue paper released by a major government think tank on Tuesday.
According to The Urban Blue Book: China City Development Report No. 5, published by the Chinese Academy of Social Sciences, the ratio of urbanites’ disposable income to rural residents’ net income reached 3.13 last year.
As about 40 percent of farmers’ net income was used to purchase chemical fertilizer, pesticide, seeds and other means of production, deducting these expenses, China’s urban income was about 5.2 times that of the countryside, said the report.
The figure for income gap is about 26 percent higher than that of 1997 and 68 percent higher than that of 1985, it said, adding it far exceeded figures of the same kind in many foreign countries.

According to The Urban Blue Book: China City Development Report No. 5, released by the Chinese Academy of Social Sciences on Aug. 14, the number of urbanites has surpassed the number of rural residents in China, with the urbanization rate reaching 51.27 percent, a significant change in the country’s social structure which ushers in an era of “city-based society”. (Xinhua/Li Jian)

The wholesale prices of 18 types of vegetables in 36 cities rose for the fourth consecutive week, up 2.9 percent week on week and 15.4 percent cumulatively over the past four weeks, according to the MOC

Remember how China was being buried alive in copper a few months ago? The stuff was piling up in carparks? Now it’s even WORSE.Judy Zhu and Han Pin Hsi, the Standard Chartered analysts who brought us the carpark images back in April, have been on another fact-finding mission, this time beginning in Waigaoqiao where they found this

Introduction: Li Simin, a CDB Staff Writer, examines Beijing’s uncertain policy environment for private migrant schools, and the role that NGOs continue to play in providing services to migrant children and families in these difficult times.

While the ability of the Turkestan Islamic Party (TIP) to conduct a major attack in China remains limited, jihadist groups in Pakistan and Afghanistan are increasingly likely to view Chinese assets and personnel as legitimate targets.Exclusive Analysis’s monitoring of social media and jihadi websites indicates an increase in jihadist rhetoric against China. In the past two months, references to Chinese “excesses” in Xinjiang, and maps denoting the region as a part of an Islamic caliphate, have increased in circulation.

Mr. Ryan professes to be a defense hawk, though the true conservatives of modern times — Calvin Coolidge, Herbert C. Hoover, Robert A. Taft, Dwight D. Eisenhower, even Gerald R. Ford — would have had no use for the neoconconservative imperialism that the G.O.P. cobbled from policy salons run by Irving Kristol’s ex-Trotskyites three decades ago. These doctrines now saddle our bankrupt nation with a roughly $775 billion “defense” budget in a world where we have no advanced industrial state enemies and have been fired (appropriately) as the global policeman.

Trading in bullish Focus Media Holding Ltd. options reached the highest level since November before the Chinese advertising company announced a leveraged buyout by private-equity firms including Carlyle Group LP. (CG)
More than 29,000 calls to buy the stock changed hands on Aug. 10, five times the four-week average and the highest since Nov. 21, according to data compiled by Bloomberg. The shares jumped 7.6 percent that day, the most since Feb. 1. Focus Media surged 8.9 percent to $25.45 in New York yesterday after the Shanghai-based company said bidders made a non-binding offer of $27 for each American depositary share.

HK: ex-banker offers free data service | beyondbrics The database allows investors to find out, for example, how every single Hong Kong IPO arranged by Goldman Sachs has performed since inception. Or how the shares of companies audited by PWC and KPMG have performed compared to those audited by lesser-known Hong Kong firms.

Wang Lijun trial has begun, says Ming Pao｜Politics｜News｜WantChinaTimes.com The trial of former Chongqing police chief Wang Lijun commenced in secret on Monday in the city of Chengdu in southwestern China’s Sichuan province, reports Hong Kong newspaper Ming Pao. According to Ming Pao’s local sources, Wang’s trial is not open to the public as it includes charges of endangering national security and leaking national secrets.

“My Family Runs The Public Security Bureau” Is The New “My Dad Is Li Gang” Beijing Cream People have latched on to the phrase “My family runs the Public Security Bureau.” Isolated from the context of an angry young man fighting for the honor of his mother, the words serve as a blunt reminder of the perceived arrogance of this country’s children of privilege. (Lu Jianbo’s father is Lu Shengmin, who Global Times says “is in charge of office management, finance and infrastructure work at the local public security bureau,” i.e. the deputy political commissar of the Jingjiang Public Security Bureau.) if Jianbo isn’t exactly a fu’erdai — second-generation rich — he’s the next best/worst thing: second-generation powerful. In other words, he will never win a public relations battle.

New Debt Crisis Looming in Wenzhou -Caijing Almost all potential financing channels for enterprises have shrunk dramatically in Wenzhou, while the second wave of a lending crisis which began last year is now brewing.

Jon Huntsman makes more not being president | footnoted.com Huntsman’s latest gig has gotten much less attention. That’s because it was buried as an exhibit in the 10-Q filed last week by Huntsman Corp. (HUN), whose Chairman, Jon Sr., happens to be Huntsman’s father and whose CEO is Huntsman’s brother, Peter. As this exhibit outlines, Huntsman, Jr. will be paid $27,500 a month plus expenses to “provide strategic advice on political, economic and business matters, particularly in connection with markets and opportunities in Asia” through December 2013.

A Well-Kept Secret: China’s Tencent Has Games on Facebook, Doing Well The fact that Facebook is inaccessible in China is not stopping the nation’s biggest web company, Tencent (HKG:0700), from getting onboard the US social network. Under the “Icebreak Games” moniker, Tencent has been putting its casual gaming skills to use, making four Facebook games so far. Stats from AppData reveal that Tencent… er, I mean Icebreak Games , has 1.1 million monthly active users (MAU) across its four games.

The only way out for China: Andy Xie – MarketWatch Most discussions on the economic and social issues frame China’s problems as similar to other countries’. They miss the point and mislead. China’s economic problems originate from government intervention in the market. Real reforms must involve changing the role of the government. Any reform that doesn’t focus on this is bound to fail.

China’s boldest media: losing the battle? – China Media Project In a report late last week, iSun Affairs, an iPad magazine operated by Hong Kong’s Sun Media Group, took an in-depth look at recent changes at the Nanfang Daily Media Group. The iSun Affairs story provides a number of crucial new details about what’s going on inside Guangdong’s leading family of newspapers, including the recent creation of an internal “examination office” (审读室) that now seems to exercise strong control over editorial content.

HTC Looks to China to Stabilize Faltering Sales – WSJ.comgood luck. they can only compete on price in china, likely get killed here// BEIJING—Taiwan smartphone maker HTC Corp. 2498.TW -0.63% is beefing up its engineering team in China and expanding sales channels to grab a piece of the Chinese market, as the company continues to struggle in the U.S. and Europe

Not your father’s baijiu | 300 Shots at Greatness Hard-core baijiu junkies aren’t going to have much use for Purfeel 21, but that’s not really the point. The fact that it got a neutral to positive response among foreign drinkers, a group that usually makes gagging noises when given baijiu, indicates that it might just be the transformational spirit it’s intended to be. Tianchengxiang is taking a risk by venturing into new territory, but I hope this risk will be rewarded and that other distillers will follow suit.